Are We Heading to a 1.3000 Price Conversion?

“Once upon a time,” I tell my customers, “a $12.99 US book retailed in Canada for $21.50, and people willingly paid the price. That’s a 1.6500 price conversion.”

Not too long ago, we faced a 1.3000 price conversion. I remember it well. It was the one and only time our family ever made it to Florida.

Yesterday, I noticed Book Depot has capitulated to the realities of the Canadian dollar and has added 10% to the Canadian site. Most of our suppliers are using 1.2000 right now, but if you check the Bank of Canada site this morning, you see the rate posted as:

and when you add the 2.5% your bank charges, you’re looking at 1.1927; and knowing that the number starts going up faster as the Canadian dollar goes lower, and recognizing that this entire process is supposed to allow some extra headroom or margin as well (taking into account the Canadian contingencies of distribution) then the present situation can’t last long.

Much of our dollar’s drop is believed to be related to the price of oil. Last night, a CBC News speculated whether that price could drop as low as $40/barrel or even as low as $20.

In my store yesterday, I spotted a number of titles that were still at the 1.1000 conversion from the early summer, and changed the price tags. For those of you who scan bar codes, this means your inventory could go up in value with just the flick of a switch. (But do you want to do this before or after your January 1st inventory count?)

The difference between now and the days of 1.6500 or even 2008 with a 1.3000 conversion, is that today we have a consumer who is much more price aware, and much more capable of finding alternative buying channels.

Still, it’s hard to stay competitive when you are paying a higher price for the inventory, especially if you purchased anything direct from the U.S. with more than 30-day terms, which exactly the situation our suppliers would find themselves in. If you do have invoices with extra terms from the U.S., I would want to be paying them early, as we did, just in case.

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